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Health Care Reform &
Health Savings Accounts

There are numerous changes
that have already taken place, and will continue to take place over the coming few years that will affect all
Americans, and HSA owners in particular.

2010

In 2010, domestic and same-sex partners are eligible for HSA reimbursements.
This means that anyone with money in a Health Savings Account can
use funds from that account tax-free to pay for their partner’s medical
or dental expenses.

On September
23rd of 2010, the following provisions came into affect for all plans
in effect since the law was enacted on March 23rd (but do not apply to
grandfathered plans already in force prior to March 23rd, 2010).

2011

There
are a couple of provisions affecting HSA owners that started January 1 of
2011.

You are no longer able
to pay for over-the-counter medicine from your HSA. At this time,
only prescribed pharmaceuticals can be paid for from an HSA.

The
penalty for withdrawals from your HSA for non-medical expenses increases
from 10% to 20%.

A long-term care insurance
program will be available via voluntary payroll deductions. (However,
private coverage is likely to provide a much better value).

2014

Most of the major changes in the health insurance market officially take place starting in 2014. HSA out-of-pocket limits in 2014 when the new health exchanges kick in will be $6,350 for individuals and $12,700 for a family.

Mandated health insurance coverage:
Everyone will be required to purchase a specific minimum level of health insurance, with a maximum out-of-pocket limit of $6,645 for individuals and $13,290 for family plans. This will limit the types of plans available compared to today. Everyone will be required to carry maternity coverage and other mandated benefits. A penalty of $95 or 1% of income will be charged by the IRS to anyone who does not carry qualified coverage, rising to $325 in 2015, and $695 or up to 2.5% of income by 2016.

Catastrophic plans only available to
young: People under age 30 will be allowed to purchase lower-cost
catastrophic plans that cover only 3 primary care visits until cost sharing
equaling the maximum deductible is reached

Minimum actuarial
value: Everyone over age 30 will be required to carry coverage
that covers at least 60 percent of the actuarial value of the benefits offered
(that being the average medical expenses incurred by a typical person in
a year). It is not clear if the contribution to a health savings account
will be counted when calculating the actuarial value. If not, the
maximum deductible that is available will go down a good bit

Maximum
deductibles: Maximum deductibles for HSA-qualified plans
in 2014 will be $6,645 for individuals and $13,290 for families. However,
it is not clear if plans with deductibles this high will actually qualify,
due to the minimum actuarial value requirement (see above)

Guaranteed
Issue: Underwriting will be eliminated, so people with pre-existing
conditions will qualify for coverage.

Cost shifting:
Younger people will be required to pay no less than one third what the oldest segment (age 60-64) pay, in order to subsidize the premiums for older Americans. Males will also be required to subsidize female premiums, so that premiums are equal for both sexes.

Subsidized premiums:
Subsidies will be available to individuals earning up to $29,327,
and a family of four earning up to $88,200.

Out of Pocket
Limits: These will be reduced for those with incomes up to
400 percent of the Federal Poverty Limit (FPL), based on the following schedule:

100 - 200% FPL: One third of HSA contribution limits: $1,983
per individual and $3,967 per family.

Small employer deductible
requirements: Deductibles on plans offered by small employers
can be no higher than $2000 for individuals and $4000 for families, unless
a flexible spending arrangement (FSA) is also included to reimburse the
difference between the higher deductible and $2000 or $4000.

Small
employer individual coverage option: Many small employers
will likely be dropping group coverage and letting their employees get individual
coverage, because of the federal subsidies that some employees would qualify
for. For employers with over 50 employees, there is a $3000 fee per
employee receiving the subsidy, up to a maximum of $2000 per year for all
employees. For businesses with less than 50 employees, there is no
fee.

We believe that high deductible HSA-compatible health insurance plans are absolutely necessary if this new law has a chance of working. We are also recommending that people get the highest deductible plan that they can now, while they are still available If you would like any assistance
in choosing a plan or getting signed up, just give us a call.

The
information above is provided for general information purposes. Much
of it is subject to further clarification from the Secretary of Health and
Human Services. There are also numerous legal challenges, including
several issues that will probably result in Supreme Court review.
If you need tax advice, contact your professional Personal Benefits Consultant or let us know
and we'll give you a referral.

Disclaimer: All information on this website is relayed to the best of the Company's ability, but does not guarantee accuracy. Information may be out of date. The content provided on this site is intended for informational purposes only and does not guarantee price or coverage. This site is not intended as, and does not constitute, accounting, legal, tax, and/or other professional advice. Determination of actual price is subject to Carriers.